InfoCision taken to task in Bloomberg Markets story

Akron-based InfoCision, a telemarketing company that solicits donations for charities, is keeping most of the money raised and misleading the public about it, according to a major investigation by Bloomberg Markets Magazine.

The story is very long and highly detailed. The Huffington Post has a succinct summary:

InfoCision instructs its employees to say, when asked, that at least 70 percent of the money that they raise for the American Cancer Society and American Diabetes Association will go toward charity, Bloomberg Markets Magazine reports. But these charities, which approved the telemarketing scripts, had agreed to give InfoCision more than half of the money raised.

In fact, InfoCision kept all the donation money that it raised on behalf of the American Cancer Society in 2010, according to Bloomberg Markets. InfoCision also kept 78% of the donation money that it collected last year in its nationwide neighbor-to-neighbor program on behalf of the American Diabetes Association.

InfoCision chief of staff Steve Brubaker tells Bloomberg Markets that the company is vital to the success of charity fundraising. Many nonprofits have stayed with InfoCision for more than 20 years, proving the firm offers value and integrity, he says.

“We've developed that high level of trust by being good stewards of their money and mission,” he tells the magazine. Campaigns to develop new donors are more expensive than those seeking money from previous supporters, according to Mr. Brubaker. However, the magazine says he declined to answer specific questions from Bloomberg Markets, noting that such information is proprietary to the company or its clients.

InfoCision's side of the story

An InfoCision spokeswoman this afternoon provided to Crain's the following statement from Mr. Brubaker:

“Let me tell you the part of the story that has not yet been told …

“For 30 years, InfoCision has partnered with the largest and most reputable nonprofit organizations in the world. If the calls we make for charities were unsuccessful for them and if our clients were unhappy, we would not be able to continue representing them. Many of our clients have been with us for 20+ years demonstrating we are providing value and integrity on a daily basis.

“It's important to understand that most charities use telemarketing as part of their overall fundraising strategy. Without proactively attempting to renew lapsed members or acquire new members, any charity will ultimately lose its membership through normal attrition and in time may no longer exist. Once the lapsed member has been renewed or the new member has been acquired, all their subsequent gifts will provide significant net return to the client over time.

“For-profit businesses roll out new customer acquisition types of campaigns all the time, such as free giveaways of sample products. Consumers don't question this strategy even though it drives up marketing costs. Stores use what's called loss-leaders to get people through their doors. They'll take a loss on say a gallon of milk in hopes the consumer will purchase other marked-up items in the same trip and, become a regular customer because of their shopping experience.

“A casual look at the solicitation reports with the various state attorneys-general gives an incomplete view of acquisition campaigns. Anyone who is looking to determine the overall allocation of resources which a nonprofit organization commits to its core mission, should review the nonprofit's Form 990 filed each year with the IRS, which provides a comprehensive summary of an organization's good stewardship of the funds entrusted to them.”

Previous problems

Last April, The Plain Dealerreported that InfoCision agreed to pay $75,000 and change its calling practices to ward off action by Ohio Attorney General Mike DeWine.

Mr. DeWine said the company failed to make required disclosures to consumers when it made solicitation calls on behalf of its nonprofit clients.

According to The PD, Mr. DeWine said an investigation by his office concluded InfoCision violated state law on “multiple occasions” in four ways:

failing to identify InfoCision as a paid solicitor when it called consumers to seek donations for its clients,

misleading consumers who asked about how much of the funds raised would go to the charity it represented,

misleading consumers that callers were volunteers or employees of a charity, and

failing to file timely financial reports to the state about the results of its fundraising drives.